Long-Term Care Insurance

Long-term care refers to a continuum of medical and social services designed to support the needs of people living with chronic health problems that affect their ability to preform everyday activities. Long-term care services include traditional medical services, social services and housing. It is estimated that 70% of people over the of 65 will need long-term care. Currently, the average cost of assisted living in Sacramento, California is $53,676 per year and $102,204 per year for a

semi-private room in a nursing home. Long-Term care insurance can be a valuable asset to prepare you that event. (Data Source: Paying for Senior Care, 2021). 

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Options For Covering Long-Term Care Expenses

Self-Insure:

If you're relatively wealthy you might choose to pay costs out of pocket. How much should you save to cover the costs? I frequently recommend that seniors have at least the average cost if they are choosing to self-insure. Don't panic yet if don't have $150.000 sitting in the bank because if you're preparing early, $75,000 invested with a 6% rate of return at the age of 55 will get you right at $150,000 by the time you're 67.

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The Hybrid Life Insurance Or Annuity Based Long-Term Care

One of the biggest trends in the long-term care industry is life insurance or annuity based long-term care coverage. Many Insurance companies are adding riders to permanent policies with the ability to cover chronic illness. Based on your age, you can take a portion of the death benefit and turn those into chronic illness dollars. It's not necessarily any cheaper than the traditional, stand alone long-term care policy. But there are advantages in combining the two for financial planning purposes as you now have the value of a tax free death benefit through the life insurance.

Annuity based coverage plays an important role for those who aren't generally healthy enough for the stand alone policy as annuities are easier to underwrite. The annuities can add income in retirement and give you the option to use those assets for chronic illness coverage. This can be an attractive option for those who don't want to lose all the money paid in premiums in the event you never needed the policy.

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The Traditional Long-Term Care Insurance Policy

If you do not have enough assets for an annuity to make sense, and you're still relatively healthy, long-term care insurance can be a great option for you. The thing I like about the traditional policy is that it's built to suit your needs or fit your budget. If the premium is more than you want to pay, the benefit, benefit period (length of coverage), elimination period and inflation protection can all be adjusted to fit your need. So for many, the traditional long-term care insurance policy is still the best fit for planning.

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Medicaid

Medicaid was created to cover the cost of chronic illness for those who could not afford it. If you have less than $150,000-$200,000 in assets between your that you don't have as much say in how you're cared for as it is government If you're seriously considering going in the Medicaid direction, an elder care attorney is going to be must.